Precision Medicine’s Revolution

At Privcap’s Healthcare Game Change conference in November 2015, Dr. Joshua Bilenker, a practicing physician who also happens to be a venture partner at Aisling Capital, discussed his investment in Loxo Oncology, and the nexus of medicine and investment. You can read more about the conference in the upcoming report summarizing the event.

Privcap: What are the most exciting trends in oncology today?

Dr. Joshua Bilenker: I’d point you to two trends. One Loxo is firmly implanted in is targeted therapy. People hear the terms “precision medicine” or “personalized medicine,” and the idea is to understand cancer at a genetic level individually, and then to pair that patient with the right drug specifically designed for that cancer. A second trend [concerns] immuno-oncology, which is the idea of taking the brakes off the human immune system so that the body can “re-recognize” the cancer as foreign, and use the immune system to attack it.

What did you learn about the healthcare business while you were an investor?

Bilenker: As an investor, when we think about the investment, we’re basically conducting a trial in a pre-revenue company with a very high cash burn and a very complex regulatory space, and we’re hoping that it works. In the life span of the investment, we’re very unlikely to sell a product. What are we really creating with our risk capital? What we really create in the better companies is unequivocal clinical data—human data that shows that there’s a health outcome that’s been impacted.

What would you say to an institutional investor interested in the biotech space who wants to put capital to work in the smartest way?

Bilenker: The great products, the great therapies, are well understood by everybody. Aligning with proven management teams that have created value, have created products that get approved—that’s obviously an important box to check.

What is life like for you as a publicly traded company, and what do you predict on the horizon?

Bilenker: The capital markets have been very interested in taking more risk. Depending on how you do the math, there are probably about 200 companies now that didn’t exist in the public markets before. Some of them probably went too early; many of them are not going to work. There’s a lot of opportunity within the public markets.

Would many of these biotech companies have an easier life as privately held companies?

Bilenker: The path to liquidity for an institutional investor, whether venture or private equity, is really twofold in biotech. One is a trade sale to a strategic partner, a big pharma, a big biotech who needs that technology for their pipeline or an IPO.

When the IPO window shuts down, there’s one path. All the power shifts to the business–development groups at 20 or 30 large pharma, large biotechs, where those teams seem to be in a revolving door on a two-to-three-year cycle. They can’t give you consistent advice as a company about what you need to show to be an attractive acquisition candidate. One thing we’ve seen in the financing of private companies is there’s much broader syndication. There used to be this orderly handoff between series A, B, and C investors, every subsequent round paying a little more than the prior round.